What are the two conflicting incentives that politicians must deal with? What is the result of this conflict?
Please provide the best answer for the statement.
The two conflicting incentives are the popular spending programs and unpopular taxation. Government spending programs are popular among voters, especially those that receive the benefit. Politicians often experience pressure to maintain or increase spending on these programs. Taxation is very unpopular among voters, pressures exists to lower tax rates or provide various tax deductions. A budget deficit is often the result of these two conflicting incentives, government spending exceeds government revenue (taxes).
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An increase in the money supply will affect aggregate demand
A) only if the increase in the money supply causes interest rates to rise. B) only if the increase in the money supply causes people to buy less goods and services. C) only if the increase in the money supply causes people to increase their saving. D) if the increase in the money supply causes interest rates to fall and/or causes people to buy more goods and services.
According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what it produce had
a. increased, so it would increase production. b. increased, so it would decrease production. c. decreased, so it would increase production. d. decreased, so it would decrease production.